What are NFTs for?
NFTs (acronym for non-fungible token, ed) act as title deeds for digital files. They came to answer a difficulty which was not that of being able to give such titles to digital works of art, in particular, which are extremely easy to copy, in their entirety, without loss of quality. From now on, NFTs are available in trading cards up to title deeds in the virtual world of the Metaverse.
Like digital currencies which are cryptocurrencies, NFTs are based on blockchain technology, how does it work?
An electronic signature is applied to the digital file and this title deed is written on a blockchain. This technology is actually used in context cryptocurrencies, like an account book where all transactions are recorded, without the need for a trusted third party such as a bank, notary or state. This registry is copied and duplicated all over the planet, all users have a copy, and you cannot forge it yourself in your corner. And because NFTs use this blockchain technology, a cryptocurrency is still needed to remunerate the people who run it.
Why are so many people investing in NFTs today?
We see huge bubbles, values that have been multiplied by incredible numbers on some objects. This is what attracts. In 2021, Beeple, an artist, sold an NFT corresponding to a photomontage for nearly $70 million. From images of little value, one can also assume to hope that they take a lot.
And are scams legion?
Yes, many scammers are taking advantage of this wave. NFTs attract a lot of people who aren’t really aware of them and can be fooled. There’s no problem selling the NFT of an image but if a person asked to invest in her business at the same time and walked away with the money, that’s different.
Will the NFT industry end up self-regulating or will it require outside intervention?
Prices could stabilize and people could be more cautious. When you are promised returns multiplied by 20, there may be checks to be done first… We need to be able to better understand the real value of these NFTs and regulation will be done this way. But there really is a lack of state regulation, especially in tax matters. These are things that take a while to happen, but NFTs have only been booming for two years.
* Jean-Guillaume Dumas is university professor of applied mathematics at the University of Grenoble Alpes and director of the international master’s degree “Cybersecurity”. He co-wrote the book “Les NFT en 40 questions” published by Dunod